Apollo Global Management Creates the Largest Buyout Fund


June 28, 2017

Private equity is not going anywhere. The latest proof is about to be revealed soon, according to reporting by CNBC. Sources close to Apollo Global Management are suggesting the private equity firm is about to close its latest buyout fund. The fund is set to become the largest in the history of buyout funds.


Breaking records


The previous record buyout fund dates back to 2007 when the private equity sector was last feeling bullish. In 2007, private equity company Blackstone raised $22 billion with its global buyout fund. But Apollo’s buyout fund is about to surpass this. Already back in April this year, CNBC was reporting how the private equity firm is hoping to raise over $23 billion with its venture.


In its May filing with the US Securities and Exchange Commission (SEC), the private equity company confirmed the figure. Dow Jones reported on Tuesday the fund is set to close soon and the total money raised stands now at $23.5 billion. This means the buyout fund will officially become the largest in history, showing the strength in private equity fundraising confidence.


Dry powder problem resurfacing


While fundraising is showing such strength, experts are starting to pay attention to the dry powder problem in the industry. Bain’s report this February showed how private equity firms are sitting on a record amount of dry powder. Globally, firms have $1.5 trillion worth of capital un-deployed.


Private equity firms have also started the year without much eagerness to deploy the capital. Pitchbook’s data shows how firms closed only one transaction valued above $2.5 billion during the first three months of 2017. On the other hand, strategic acquirers closed 20 deals of the same size or, indeed, bigger during the same time in the US.


The tops three US private equity acquisition in the US since the start of the year have been scattered across sectors. In March, KKR and Co. led an acquisition of USI Insurance Services with a price tag of $4.3 billion. The same month, Bain Capital acquired Sealed Air Corporation, Diversey Care Division and the Food Hygiene and Cleaning Business. In February, SoftBank made a deal worth $3.27 billion for Fortress Investment.


Is US political uncertainty a chance for private equity?


According to CNBC, the current political uncertainty in the US could help private equity companies put their money to use. Purchases of US firms have decreased, largely due to delays and uncertainty over the Trump Administration’s promised tax reforms. The topic has been mentioned regularly by the Trump Administration as a key issue, however, no legislative progress has yet been made. If interest by other players to purchase US firms remains low, private equity firms might have an opportunity to capitalise on this.


The interesting thing will be to see when private equity firms feel bullish enough to take on Apollo’s record-breaking buyout fund. It’s unlikely to happen anytime soon.

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